Live data from Hacker News

Leaked Uber financials from 2012 to 2014

recode.net

101–107 of 107 posts

Re: Leaked Uber financials from 2012 to 2014

#101

I think Uber thinks lighting piles of cash on fire is somehow a competitive edge builder, when the more money they burn faster, the bigger the return they need to make on a razor thin margin, zero barrier to entry market with no network effects. As soon as they've knocked down the walls of regulation and stretched out thin and begin to make any profit at all, it will signal other new entrants. The newer entrants are…

Note: we built a rideshare matching system so this is from my experience

single person with 1 car has no network effect. 1+ passengers does. See my post above.

Re: Leaked Uber financials from 2012 to 2014

#102
post #26

Earlier quoted context omitted.

It may actually hurt. Uber is in the growth business. They aren't bootstrapping. It may not be worth the time for them to think whether or not they really need to hire someone for x position in x market when they have hundreds of positions to fill in dozens of markets.

Yeah, they likely have decades of amazing margins ahead of them. Doesn't make sense to be too frugal in just the first few years if it puts that growth at stake.

Until they get in price competition with a few others. Imagine Google launching a self-driving taxi business at 20% lower prices than Uber. It would be a bloodbath price competition that Google would win because of their deep pockets and lower costs.

Re: Leaked Uber financials from 2012 to 2014

#103

Basic rundown of Rev / Loss from reports: Q1.12: 1.4M / 3.4M Q2.12: 2.1M /2.3M Q3.12: 4.3M / 5.4M Q4.12: 8.2M / 7.0M Q1.13: 12.9M / 7.3M Q2.13: 19.3M / 8.1M 2013 (total): 104M / 56M Q1.14: 45.6M / 52.2M Q2.13: 56.9M / 108.8M Rev grew faster than losses consistently all through 2012 and 2013 which is really amazing (2013 is when Uber jumped from a 330M valuation to a 3.5B valuation so investors noticed too)...then los…

So what happens when they've aggressively expanded into all their target markets and are still not profitable and have nowhere else to go? Pure expansion is pretty much the sign of a first-mover bubble company who will collapse with their advantage being copied by calmer second-movers...

You are right, IF the early markets are still not profitable - the key numbers that we don't have are: how are the first 100 cities they launched doing? how are the first 10 cities they launched doing? If those cities have achieved profitability or are approaching it, then it works. Unfortunately, we don't have those #s.

However, if you look here there's some indication that earlier markets were at least closing the operating loss gap: QQ4.12: 8.2M / 7.0M Q1.13: 12.9M / 7.3M Q2.13: 19.3M / 8.1M

Losses slowed dramatically here, while revenue grew. Note, Uber was still launching cities at this point, but had already taken most of the major US markets - my guess is that SF + NY + LA were getting closer to paying for themselves while they streamlined their launch process into smaller markets in the US. I feel OK making that guess because it's hard to believe that an investor would not have asked for that, and it's hard to believe that an investor would value Uber at $3.5B (the valuation at that time) if that wasn't happening. (Note - I understand that investors are not always actually this rational, I'm just making an assumption in this case).

I imagine the pitch was: look at our early markets, they are cash-cows, and we know how to make them. Now, give us $XB to go make more of these cash-cows please and don't ask us about losses for a long time, thanks! Which is why they don't really care about these leaked #s.

Re: Leaked Uber financials from 2012 to 2014

#104
post #56

As the article points out, the real question is whether Uber is making money in mature markets, such as San Francisco. If the mature markets aren't highly profitable, Uber is way overvalued.

They make 20% of every ride. What costs do they really have in a mature market? A bit of customer service and maintaining the app. I don't see how it could possibly do anything but print cash in mature markets.

Drivers won't be Uber drivers forever - they'll need to keep pushing to hire new drivers to replace ones that drop out.

And don't write off customer service - it is expensive.

Re: Leaked Uber financials from 2012 to 2014

#105

Earlier quoted context omitted.

If they do that someone else will out compete them.

I wonder if it'll eventually make sense to have free driverless cars that serve you with ads. That would be interesting.

I can see how an ad could pay for a visit to a web site, but how can you get an advertiser to pay enough for ads so that they pay for a few miles worth of power for a car (let's assume that it's an electric vehicle), plus a few miles worth of depreciation and maintenance?

The IRS currently allows a deduction of 57.5 cents per mile for business use of a vehicle. That's a ballpark figure for what the fuel and depreciation costs per mile.

I doubt that an electric car is that much cheaper per mile than a gas vehicle, since the battery is very expensive and needs to be replaced after some number of charge/discharge cycles. For a car that's used as a taxi 24 hours a day, you probably have to recharge daily, leading to frequent battery replacement. (A taxi can easily drive hundreds of miles every day - one round trip from midtown Manhattan to JFK airport is around 30 miles).

Even an electric self-driving vehicle requires periodic replacement of tires, shocks, etc. And a vehicle used by the public would probably require at least a daily cleaning of the interior. Plus, you're legally required to carry liability insurance (for damage you cause to other vehicles, people or property). Adding up all these expenses, it doesn't seem possible to break even by selling ads.

Re: Leaked Uber financials from 2012 to 2014

#106
post #100

Earlier quoted context omitted.

yep ...if it gets as easy to bootstrap a ride sharing company it is for chat apps with the mobile address book competition might be tough on uber. see also http://continuations.com/post/77698925932/facebook-massively...

That post is missing the network effects. Put another way switching costs are high not because it is easy to bootstrap these but the fact that to switch, your entire social circle would need to switch around the same time. It is no use half switching, if you have an app which has 50% of your friends and another with 100% which will you use? * that for every person and your retention drops and you end up with a feedba…

I thought the whole point (of the post) was the network effects can effectively be bootstrapped from the mobile phone book.

if all drivers (who aren't uber employees) and all users can be part of multiple networks (bootstrapped from mobile phonebook and almost zero cost to both) how can uber maintain a dominant position?

Re: Leaked Uber financials from 2012 to 2014

#107

Earlier quoted context omitted.

In transportation business major costs are vehicle depreciation/maintenance/consumables (fuel, insurance, tires, etc), wages and you can include domain specific expenses (insurance, driver health chek-ups). * You can't reduce DS expenses. You can offload them to drivers, but that will still be reflected in prices * You can reduce wage cost by eliminating administrative load by having tools (apps, backends) do the job…

I am not sure how much of an edge one can gain by doing demand prediction through algorithms. In large markets the patterns are fairly trivial (big game ended, everybody goes home; it's 5 pm in financial district, people are leaving work; busy time at the airport, bunch of flights arriving at once) and known to all participants.

My point was not about (officially or not) scheduled spikes in traffic. These are known for all parties in advance. I was talking more about organic traffic - Random Joe hailing a cab just because. And cabs generally just drive around expecting to catch the Random Joe wasting time/vehicle/fuel. Now if you can predict temporal/geographical density of Random Joes hailing a cab - well, you have an edge there simply by increasing utilisation rate. Is this even possible? Have no idea.
Post reply on HN